Is it worth it? Benefits of Proactively Developing our Small Cities

Baseline projections outlined in the Deal or No Deal? report show that Australia’s small cities are already expected to grow strongly over the coming decade. But why should our regional cities settle for the status quo? If regions were to take full advantage of their economic potential, there are greater economic gains up for grabs.

By 2026 Australia’s small cities are projected to grow to 5.6 million people. That is a 16 per cent growth in population over 10 years.

This growth in people will fuel economic growth.

And for every additional 100,000 Australians who choose to live in small cities rather than the capital cities, the RAI estimates that around $42 billion dollars will be released into the economy over the next 30 years through reduced interest payments on mortgages alone. Released back into the consumption economy this is would be a considerable national economic stimulus.

Small city growth can also play a role in reducing congestion problems in Australia’s major cities. The avoidable cost of congestion in Australia’s capital cities was $16.1 billion in 2010. This takes into account both the value of private and business time, as well as vehicle operating costs and air pollution costs.

Accordingly, for every 100,000 Australians who choose to live in small cities rather than our major cities, the savings in congestion costs would be in the order of $292 million per year or $4.9 billion over 30 years.

As well as providing an opportunity for more Australians to choose to live in our small cities, City Deals should also help to relieve some of the problems that are holding back the overall productivity of our small cities.

In particular, increased workforce participation in cities is one area that an effective set of city deals could have a major impact, driving new economic growth and reducing the costs to government of welfare and associated social services expenditure.

A coordinated, proactive and locally led approach to developing our small cities can capture these benefits and more for our national economy and demonstrate that dealing small cities into the national agenda as a policy priority is an essential national objective.

Given these potential scenarios and the economic gains possible, we no longer need to be asking is it worth it? Instead, we should now be asking if we are prepared to miss such an opportunity.